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UK says it may seek 'temporary' customs union with EU

LONDON – Britain on Tuesday gave its most detailed indication yet of how its future trade with the European Union might work after Brexit, laying out proposals to replace membership in the bloc's customs union with new mechanisms designed to allow "frictionless" trade to continue.

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The plans were dismissed as "a fantasy" by one senior EU official. And anti-Brexit campaigners in Britain said they would merely replace EU regulations with new ones that could be even more onerous.

The Department for Exiting the European Union said there could be "a temporary customs union between the U.K. and the EU" to avoid border chaos when Britain officially leaves the bloc in March 2019.

Brexit Secretary David Davis said the transition period could last about two years.

In the long term, the department said, a "customs partnership" could eliminate the need for a border for goods traveling between Britain and the EU. The partnership would see Britain impose the exact same requirements as the EU on goods from outside the bloc destined for member states.

Alternately, it suggested "a highly streamlined customs arrangement" could be set up, using technology to ease border procedures.

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The proposals drew a cool response from Brussels.

"To be in & out of the Customs Union & 'invisible borders' is a fantasy," tweeted Guy Verhofstadt, the European Parliament's Brexit coordinator.

Some British businesses have accused the government of being vague about whether there will be economic barriers with the EU after Brexit. The persistent uncertainty — 14 months after Britain voted to leave the EU — is weighing on the economy.

Trade Secretary Liam Fox and Treasury chief Philip Hammond wrote in the Sunday Telegraph that in 2019 Britain will leave both the EU's single market in goods and services and its customs union.

The single market ensures tariff-less trade in goods and services and is linked closely by the EU with other rights, such as the right of EU citizens to cross borders. The customs union allows goods to move within the EU without checks, but also imposes tariffs on imports from outside the EU. That would prevent Britain striking new free trade deals while it remains inside the arrangement.

The British proposal says the U.K. should be free to negotiate new trade relationships during the transition period, something EU officials are likely to find problematic.

Scottish First Minister Nicola Sturgeon, who favors Britain's staying in the single market and customs union, accused the government on Twitter of having a "daft 'have cake and eat it' approach" to Brexit.

The customs proposals are the first in a series of papers covering thorny issues in the negotiations, which are due to resume in Brussels at the end of this month. Another, on the status of the border between Northern Ireland and the Republic of Ireland, is due to be published this week.

The European Commission said it took note of Britain's suggestions, "but we will only address them once we have made sufficient progress on the terms of the orderly withdrawal" from the bloc.

The EU says negotiations on its future relations with Britain can't start until sufficient progress has been made on three initial issues: how much money the U.K. will have to pay to settle its outstanding commitments to the bloc; whether security checks and customs duties will be instituted on the Irish border; and the status of 3 million EU nationals living in Britain.

Michel Barnier, the EU's chief Brexit negotiator, tweeted that the quicker the two sides "agree on citizens, settling accounts and Ireland, the quicker we can discuss customs & future relationship."